<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
GALAXY FOODS COMPANY, a Delaware corporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the approximate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and O-11.
1. Title of each class of securities to which
transaction applies:
2. Aggregate number of securities to which transaction
applies:
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
O-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule O-11(a)(2) and identify
the filing for which the offsetting fee was paid
previously. Identify the previous filing by
registration statement number, or the Form or
Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE> 2
[GALAXY FOODS LOGO]
GALAXY FOODS COMPANY
2441 Viscount Row
Orlando, Florida 32809
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, NOVEMBER 16, 2000
To the Shareholders:
The Annual Meeting of Shareholders of Galaxy Foods Company (the "Company"), will
be held Thursday, November 16, 2000 at 10:00 a.m. at the Wyndham Hotel, located
at 8001 International Drive, Orlando, Florida for the following purposes:
1. To fix the number of directors at four and to elect a Board of
Directors for the ensuing periods.
2. To consider and vote upon an amendment to the Company's
Certificate of Incorporation, as amended, to change the name
of the Company to "Galaxy Nutritional Foods, Inc.";
3. To ratify the retention of BDO Seidman, L.L.P. as the
independent auditors of the Company for the fiscal year ended
March 31, 2001.
4. To transact such other business as may properly come before
the meeting and any adjournment thereof.
Shareholders of record at the close of business on October 12, 2000 will be
entitled to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ Keith A. Ewing
------------------------------
Keith A. Ewing, Chief Financial Officer
Orlando, Florida
November 1, 2000
SHAREHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED STAMPED ENVELOPE BY RETURN MAIL. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE IN PERSON.
<PAGE> 3
GALAXY FOODS COMPANY
2441 VISCOUNT ROW
ORLANDO, FLORIDA 32809
November 1, 2000
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, NOVEMBER 16, 2000
PROXIES IN THE FORM ENCLOSED WITH THIS PROXY STATEMENT ARE SOLICITED BY THE
BOARD OF DIRECTORS OF GALAXY FOODS COMPANY (THE "COMPANY"), A DELAWARE
CORPORATION, FOR THE USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
THURSDAY, NOVEMBER 16, 2000 AT 10:00 A.M. AT THE WYNDHAM HOTEL LOCATED AT 8001
INTERNATIONAL DRIVE, ORLANDO, FLORIDA.
Only shareholders of record as of October 12, 2000 will be entitled to vote at
the meeting and any adjournment thereof. As of October 12, 2000, 9,202,945
shares of Common Stock, par value $.01 per share, of the Company were issued and
outstanding. Each share of Common Stock outstanding as of the record date will
be entitled to one vote, and shareholders may vote in person or by proxy.
Execution of a proxy will not, in any way, affect a shareholders' right to
revoke it by written notice to the Secretary of the Company at any time before
it is exercised or by delivering a later executed proxy to the Secretary of the
Company at any time before the original proxy is exercised. This proxy statement
and the form of proxy were first mailed to shareholders on or about November 1,
2000.
All properly executed proxies returned in time to be cast at the meeting will be
voted and, with respect to the election of a Board of Directors, will be voted
as stated below under "Election of Directors". Any shareholder giving a proxy
has the right to withhold authority to vote for any individual nominee to the
Board of Directors by writing that nominee's name in the space provided on the
proxy. In addition to the election of directors, the shareholders will consider
and vote upon (i) a proposal to amend the Company's Certificate of
Incorporation, as amended, to change the name of the Company to "Galaxy
Nutritional Foods, Inc.", and (ii) a proposal to ratify the retention of BDO
Seidman, L.L.P. as the Company's auditors for the fiscal year ending March 31,
2001. Where a choice has been specified on the proxy with respect to the
foregoing matters, the shares represented by the proxy will be voted in
accordance with the specification, and will be voted FOR if no specification is
indicated.
<PAGE> 4
The Board of Directors knows of no other matter to be presented at the meeting.
If any other matter should be presented at the meeting upon which a vote might
be taken, shares represented by all proxies received by the Board of Directors
will be voted with respect thereto in accordance with the judgment of the
persons named as attorneys in the proxies.
PROPOSAL ONE ELECTION OF DIRECTORS
A full board of four directors of the Company will be elected to serve until the
next annual meeting of shareholders and until their successors shall have been
elected and qualified. All of the nominees are currently serving as directors of
the Company, all have consented to being named herein and all have indicated
their intention to serve as directors of the Company, if elected.
Unless you specify otherwise, your proxy will be voted to fix the number of
directors for the ensuing year at four and for the election of the nominees
named below, all of whom are now Directors. If any nominee becomes unavailable,
your proxy will be voted for a new nominee designated by the Board unless the
Board reduces the number of directors to be elected. The Board of Directors
knows of no reason why any nominee should be unable or unwilling to serve, but
if such be the case, proxies will be voted for the election of some other person
or for fixing the number of directors at a lesser number.
The nominees for the Board of Directors are:
<TABLE>
<S> <C>
ANGELO S. MORINI
Age: 58
First Elected: 1987
Experience: Galaxy Foods Company - Chairman of the Board of Directors,
President, and Chief Executive Officer (since 1987); Galaxy
Cheese Company - President (1980-1987), General Manager
(1972-1980)
DOUGLAS A. WALSH
Age: 55
First Elected: 1992
Experience: Practicing physician specializing in Family Practice and
Sports Medicine (Since 1970); Family Doctors physician
group (1984 to present); Mahoning County, Ohio - Health
Commission (1971- 1984); U.S. Air Force 911 Tac Clinic,
Pittsburgh, Pennsylvania Clinic Commander (1983-1985);
Patrick Air Force Base, Cocoa Beach, Florida - Flight
Surgeon (1985-1988).
MARSHALL K. LUTHER
Age: 47
First Elected: 1996
Experience: Tropicana Products, Inc. - Senior Vice President, Marketing
(1993-1995); General Mills International Restaurants -
various marketing positions (1975-1992).
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
JOSEPH JULIANO
Age: 49
First Elected: 1999
Experience: Pepsi-Cola Company - various management positions (1973- 1988);
Pepsi Cola Company Bottling Operations - management
(1988-1991); Pepsi Cola North America - Vice President of
Prestige, Sports and Gaming (1991-1998), Vice President
of Entertainment Sales (1998-present).
</TABLE>
All elected Directors will serve until the next annual meeting for and until
their successors are elected and qualified. Abstentions, broker non-votes, and
instructions on the accompanying proxy card to withhold authority to vote for
one or more of the nominees will result in the respective nominees receiving
fewer votes. If for any reason any nominee should, prior to the annual meeting,
become unavailable for election as a director, an event not now anticipated, the
proxies will be voted for such substitute nominee, if any, as may be recommended
by the Board. In no event, however, shall the proxies be voted for a greater
number of persons than the number of nominees named.
PROPOSAL TWO: TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION, AS
AMENDED, TO CHANGE THE NAME OF THE COMPANY TO "GALAXY
NUTRITIONAL FOODS, INC."
GENERAL
The Board of Directors of the Company has approved an amendment to the Company's
Certificate of Incorporation, as amended (the "Certificate of Incorporation") to
change the name of the Company to "Galaxy Nutritional Foods, Inc." A copy of the
proposed amendment to the Certificate of Incorporation changing the name of the
Company, in substantially the form in which it is proposed to be filed, is
attached as Exhibit A.
PURPOSE OF THE CHANGE OF THE COMPANY'S NAME TO "GALAXY NUTRITIONAL FOODS, INC."
The purpose of the name change is to more clearly define the Company to its
customers and to the financial markets as a company whose primary focus is the
development, production, and distribution of healthy, nutritional foods. The
proposed name change is consistent with the Company's historical marketing
strategies and its efforts to brand its products in the nutritional food segment
of the food manufacturing industry. The Company's main focus is on producing,
marketing, selling and distributing healthy dairy-related alternatives for the
retail, health food and food service markets and management believes that the
name change will assist in distinguishing the Company as a producer of
alternative foods, rather than a traditional food manufacturer.
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If the name change is approved, shareholders will not be required to exchange
their stock certificates issued under the name "Galaxy Foods Company" for stock
certificates issued under the Company's new name.
EFFECTIVENESS
In accordance with Delaware law and notwithstanding approval of the amendment by
shareholders, at any time prior to the filing of the Certificate of Amendment,
the Board of Directors may, in its sole discretion, abandon the proposed
amendment without any further action by shareholders.
VOTING
Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of the voting power of the outstanding shares of Common Stock is
necessary for approval of the change in the Company's name to "Galaxy
Nutritional Foods, Inc."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE CHANGE IN THE COMPANY'S NAME.
PROPOSAL THREE: TO RATIFY THE RETENTION OF BDO SEIDMAN, L.L.P. AS THE COMPANY'S
AUDITORS
The Board of Directors has selected the firm of BDO Seidman, L.L.P. as the
Company's independent certified public accountants for the current fiscal year.
BDO Seidman, has served as the Company's independent public accountants for each
of the last seven years. It is expected that a representative of BDO Seidman,
L.L.P. will be present during the Annual Meeting, or will participate by
telephone conference. The representative will have an opportunity to make a
statement if he or she so desires and is expected to be available to respond to
appropriate questions from shareholders.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of outstanding shares of
Common Stock present or represented at the Annual Meeting is required for the
approval of this Proposal. Broker non-votes and abstentions will be treated as
votes against this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RETENTION OF
BDO SEIDMAN, L.L.P. AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FOR THE CURRENT FISCAL YEAR.
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<PAGE> 7
OFFICERS AND DIRECTORS
The following table sets forth the current and proposed directors and the
current officers of the Company as of October 12, 2000, and the ages of and
positions with the Company held by each of such persons:
NAME AGE POSITIONS
--------------------------------------------------------------------------------
Angelo S. Morini (1) 58 Chairman of the Board of Directors,
President, and Chief Executive Officer
Keith A. Ewing 40 Chief Financial Officer
Christopher Morini 45 Vice President of Marketing
John Jackson 42 Vice President of Sales
Douglas A. Walsh (1)(2) 55 Director
Marshall K. Luther (1)(2) 47 Director
Joseph Juliano (1)(2) 49 Director
(1) Nominee for Director.
(2) Audit Committee Member.
The current directors of the Company are the sole nominees for election to the
Board of Directors for the ensuing year.
Each director is elected to hold office for a one-year term and until his
successor is chosen and qualified. The officers of the Company are elected
annually at the first Board of Directors meeting following the annual meeting of
shareholders, and hold office until their respective successors are duly elected
and qualified, unless sooner displaced.
Angelo S. Morini has been President of the Company since its inception and is
the inventor of formagg(R). He was elected Chairman of the Board of Directors,
President, and Chief Executive Officer in 1987. Between 1972 and 1980, Mr.
Morini was the general manager of Galaxy Cheese Company, which operated as a
sole proprietorship until its incorporation in May 1980. Prior to 1974, he was
associated with the Food Service Division of Pillsbury Company and the Post
Division of General Foods Company. In addition, he worked in Morini Markets, his
family-owned and operated chain of retail grocery stores in the New Castle,
Pennsylvania, area. Mr. Morini received a B.S. degree in Business Administration
from Youngstown State University in 1968. Angelo S. Morini's brother,
Christopher Morini, works for the Company as Vice President of Marketing. Angelo
S. Morini's wife, Julie Morini, is employed by the Company in the marketing and
public relations departments. Also, Mr. Morini's brother-in-law, Robert
Peterson, is employed by the Company as a sales representative.
Keith A. Ewing has been Chief Financial Officer of the Company since February
2000. From 1998 through January 2000, Mr. Ewing was the Vice President of
Finance for CNL Corporate Properties, Inc. His main focus has been completing
large financing transactions for both public and privately held companies. From
1994 through 1998, Mr. Ewing was Chief Financial Officer of Premier Property
Group, Inc., a privately held London based investment company. Mr. Ewing's
public company experience includes serving as controller of Mid-State Homes,
Inc., a $3 billion finance division of Walter Industries, Inc., and general
manager of accounting for Nutmeg Mills, Inc. Mr. Ewing
5
<PAGE> 8
received a B.S. in Accounting from Florida State University in 1982 and is
currently a Florida Certified Public Accountant.
Christopher Morini, has been Vice President of Marketing and International Sales
for the Company since 1996. Mr. Morini started with the Company as an area
salesman in 1983. In 1984, Mr. Morini served as a sales manager. From 1986
through 1996, Mr. Morini has been a Vice President of the Company, where he has
been responsible for various sales and marketing divisions of the Company,
including the Food Service, International Sales and Retail Sales divisions. Mr.
Morini received a B.S. in Economics from Slippery Rock University in 1978.
Christopher Morini's brother, Angelo S. Morini, is the Chairman of the Board,
Chief Executive Officer and President of the Company.
John Jackson, has been Vice President of Sales for the Company since 1993. From
1985 through 1992, Mr. Jackson was Director of Sales for H.J. Heinz Company. Mr.
Jackson received his B.S. in Business Administration and Accounting from Mars
Hill College in 1980.
Douglas A. Walsh, D.O., has been a director of the Company since January 1992.
Dr. Walsh has been a practicing physician since 1970, specializing in Family
Practice and Sports Medicine. From 1984 to present, he has been affiliated with
Family Doctors, a four-physician group located in Tampa, Florida. From 1971 to
1984, he was the Health Commissioner for Mahoning County, Ohio, and from 1983 to
1985, he was the Clinic Commander for the U.S. Air Force 911 Tac Clinic in
Pittsburgh, Pennsylvania. From 1985 to 1988, he was a flight surgeon at Patrick
Air Force Base, Cocoa Beach, Florida. Dr. Walsh's teaching appointments include
Associate Professor of Family Practice (Clinical) at Ohio University and
Clinical Preceptor at the University of Health Sciences, Kansas City, Missouri.
Dr. Walsh received a B.S. degree in Microbiology from the University of Houston,
Houston, Texas, in 1965, and a D.O. degree from the University of Health
Sciences, Kansas City, Missouri, in 1970. Dr. Walsh also serves as a team
physician for the Pittsburgh Pirates organization.
Marshall K. Luther was elected to the Board of Directors on January 31, 1996.
From 1993 to 1995, Mr. Luther served as Senior Vice President, Marketing of
Tropicana Products, Inc. and from 1975 to 1992, he served in various marketing
positions for General Mills International Restaurants. Mr. Luther received his
B.S. in Engineering from Brown University in 1974 and his M.B.A. in Marketing
from the Wharton Graduate School of Business in 1976.
Joseph Juliano was elected to the Board of Directors on June 16, 1999. From 1973
to 1988, Mr. Juliano served in various management positions for Pepsi-Cola
Company. In 1988, Mr. Juliano managed Pepsi Cola Company Bottling Operations
where he achieved record sales and profits during his three-year tenure in this
position. From 1991 to 1998, he served as Vice President of Prestige, Sports and
Gaming for Pepsi Cola North America. In 1998, he was promoted to Vice President
of Entertainment Sales, with expanded domestic and international account
responsibilities encompassing movie theaters, theme parks, sports venues, theme
restaurants, hotels, and casinos. Mr. Juliano received his Masters in Business
Administration from St. John's University in New York City.
6
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth to the knowledge of Management, each person of
entry who is the beneficial owner of more than 5% of the 9,202,944 shares of the
Company's Common Stock, $.01 par value ("Common Stock") outstanding as of
October 12, 2000, the number of shares owned by each such person and the
percentage of the outstanding shares represented thereby.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS(2)
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Angelo S. Morini
2441 Viscount Row
Orlando, Florida 32809 4,952,745 (3) 45.9%
Cede & Co.
Box #20
Bowling Green Station
New York, New York 5,250,692 (4) 48.6%
</TABLE>
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of these shares.
(2) The total number of shares outstanding assuming the exercise of all
currently exercisable and vested options and warrants held by all executive
officers, current directors, and holders of 5% or more of the Company's issued
and outstanding Common Stock is 10,801,273 shares. Does not assume the exercise
of any other options or warrants.
(3) Includes options to acquire 1,520,072 shares of the Company's Common
Stock. All of Mr. Morini's options currently are exercisable at $3.31 to $5.25
per share. The original exercise prices of 20,215 of the options ranged from
$17.50 per share to $25.03 per share. The exercise prices of these options were
reduced by the Board of Directors to $3.50 per share on August 31, 1993. Options
expire as to 7,143 shares and 13,072 shares on December 4, 2002, as to 142,857
on July 1, 2007, and as to 1,357,000 shares on June 15, 2009. Also includes 715
shares owned by Mr. Morini that are held in a nominee name and 286 shares held
in joint tenancy. With the exception of the options and the shares held in a
nominee name, all of Mr. Morini's shares are held by Morini Investments Limited
Partnership, a Delaware limited liability partnership, of which Angelo Morini is
the Limited Partner and Morini Investments LLC is the General Partner. Mr.
Morini is the sole member of Morini Investments LLC.
(4) Cede & Co. is a share depository used by shareholders to hold stock in
street name. Does not include 715 shares beneficially owned by Angelo S. Morini
and held by Cede & Co. in street name.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of October 12, 2000, the number of shares
owned directly, indirectly and beneficially by each executive officer and each
director and director-nominee of the Company, and by all executive officers and
directors as a group:
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<PAGE> 10
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS(2)
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Angelo S. Morini
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 4,952,745 (3) 45.9%
Douglas A. Walsh
607 Tamiami Trail
Ruskin, Florida 33570 3,645 (4) *
Marshall K. Luther
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 9,190 (5) *
Joseph Juliano
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 10,334 (6) *
Keith A. Ewing
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 9,533 (7) *
Christopher Morini
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 24,757 (8) *
John Jackson
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809 26,829 (9) *
All executive officers and directors
as a group 5,037,033 46.7%
</TABLE>
* Less than 1%.
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of these shares.
(2) The total number of shares outstanding assuming the exercise of all
currently exercisable and vested options and warrants held by all executive
officers, directors, and holders of 5% or more of the Company's issued and
outstanding Common Stock is 10,801,273 shares. Does not assume the exercise of
any other options or warrants.
(3) Includes options to acquire 1,520,072 shares of the Company's Common
Stock. All of Mr. Morini's options currently are exercisable at $3.31 to $5.25
per share. The original exercise prices of 20,215 of the
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<PAGE> 11
options ranged from $17.50 per share to $25.03 per share. The exercise prices
of these options were reduced by the Board of Directors to $3.50 per share on
August 31, 1993. Options expire as to 7,143 shares and 13,072 shares on
December 4, 2002, as to 142,857 on July 1, 2007, and as to 1,357,000 shares on
June 15, 2009. Also includes 715 shares owned by Mr. Morini that are held in a
nominee name and 286 shares held in joint tenancy. With the exception of the
options and the shares held in a nominee name, all of Mr. Morini's shares are
held by Morini Investments Limited Partnership, a Delaware limited liability
partnership, of which Angelo Morini is the Limited Partner and Morini
Investments LLC is the General Partner. Mr. Morini is the sole member of Morini
Investments LLC.
4) Dr. Walsh, a current member of the Board of Directors, was granted an
option to acquire 2,143 shares of Common Stock on January 31, 1992 for an
exercise price of $21.00 per share. This option expires on January 31, 2002.
The closing bid price of the Company's Common Stock as quoted on the NASDAQ
System on January 30, 1992 was $17.50 per share. Dr. Walsh was granted an
additional option on October 1, 1992 to acquire 72 shares of Common Stock at an
exercise price of $20.13 per share. This option expires on October 1, 2002. The
closing bid price of the Company's Common Stock as quoted on the NASDAQ System
on September 30, 1992 was $18.38 per share. The exercise price of all of Dr.
Walsh's then existing options was reduced to $14.00 per share on January 31,
1994. The closing bid price of the Company's Common Stock as quoted on the
NASDAQ System on January 28, 1994 was $32.38 per share. On October 1, 1994, Dr.
Walsh was granted an option to acquire 143 shares at an exercise price of
$19.25 per share. The closing bid price of the Company's Common Stock as quoted
on the NASDAQ System on September 30, 1994, was $20.13 per share. This option
expires on October 1, 2004. On October 1, 1995, Dr. Walsh was granted an option
to acquire 143 shares at an exercise price of $4.13 per share. The closing bid
price of the Company's Common Stock as quoted on the NASDAQ System on September
29, 1995, was $4.16 per share. This option expires on October 1, 2005. On
October 1, 1996, Dr. Walsh was granted an option to acquire 286 shares at an
exercise price of $10.29 per share which expire on October 1, 2006. The closing
bid price of the Company's Common Stock as quoted on the NASDAQ System on
September 30, 1996 was $10.50 per share. On October 1, 1997, he was granted an
option to acquire 286 shares at an exercise price of $8.31 per share which
expire on October 1, 2007. The closing bid price of the Company's Common Stock
as quoted on the NASDAQ system on September 30, 1997 was $8.31 per share. On
October 1, 1998, he was granted an option to acquire 286 shares at an exercise
price of $3.06 per share which expire on October 1, 2008. The closing bid price
of the Company's Common Stock as quoted on the NASDAQ system on September 30,
1998 was $3.06 per share. On October 1, 1999, he was granted an option to
acquire 286 shares at an exercise price of $4.13 per share which expire on
October 1, 2009. The closing bid price of the Company's Common Stock as quoted
on the NASDAQ system on September 30, 1999 was $4.13 per share. All of Dr.
Walsh's options currently are exercisable.
(5) Mr. Luther, a current member of the Company's Board of Directors,
holds warrants to acquire 7,143 shares of Common Stock at a price of $4.48 per
share which expire on August 28, 2005. These warrants were granted as
compensation for work per the terms of Mr. Luther's former agreement with the
Company to serve as Senior Vice President of Marketing for a term of one year.
In addition, Mr. Luther was granted options to acquire 2,143 shares of the
Company's Common Stock on January 31, 1996, for an exercise price of $5.69 per
share, which option expires on January 31, 2006. On October 1, 1996, Mr. Luther
was granted an option to acquire 190 shares at an exercise price of $10.29 per
share which expire on October 1, 2006. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ System on September 30, 1996 was $10.50
per share. On October 1, 1997, he was granted an option to acquire 286 shares
at an exercise price of $8.31 per share which expire on October 1, 2007. The
closing bid price of the Company's Common Stock as quoted on the NASDAQ system
on September 30, 1997 was $8.31 per share. On October 1, 1998, he was granted
an option to acquire 286 shares at an exercise price of $3.06 per share which
expire on October 1, 2008. The closing bid price of the Company's Common Stock
as quoted on the NASDAQ system on September 30, 1998 was $3.06 per share. On
October 1, 1999, he was granted an option to acquire 286 shares at an exercise
price of $4.13 per share which expire on October 1, 2009. The closing bid price
of the Company's Common Stock as quoted on the NASDAQ system on September 30,
1999 was $4.13 per share. All of Mr. Luther's options currently are
exercisable.
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<PAGE> 12
(6) Mr. Juliano, a current member of the Company's Board of Directors, was
granted on October 1, 1999, options to acquire 72 shares at an exercise price
of $4.13 per share which expire on October 1, 2009. The closing bid price of
the Company's Common Stock as quoted on the NASDAQ system on September 30, 1999
was $4.13 per share. All of Mr. Juliano's options currently are exercisable.
(7) Includes options to acquire 25,000 shares of the Company's Common
Stock which were granted to Mr. Ewing in fiscal 2000 pursuant to his employment
agreement. Such options are exercisable at $3.75 per share and expire on
February 10, 2010. One third of the options are exercisable as of February 8,
2000, one third of the options are exercisable on February 8, 2001, and the
final one-third of the options are exercisable on February 8, 2002.
(8) Includes options to acquire 22,857 shares of the Company's Common
Stock. All of Mr. Morini's options currently are exercisable at $2.87 to $8.47
per share. Options expire as to 7,143 shares on May 16, 2006, as to 714 on
October 1, 2001, as to 714 on August 31, 2003 and as to 14,286 shares on
September 24, 2008.
(9) Includes options to acquire 21,429 shares of the Company's Common
Stock. All of Mr. Jackson's options currently are exercisable at $2.87 to $8.47
per share. Options expire as to 7,143 shares on May 16, 2006 and as to 14,286
shares on September 24, 2008.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 17, 1999, the Company's Board of Directors approved to rescind the
existing employment agreement with the Company's President and Chief Executive
Officer, Mr. Angelo S. Morini, and to enter into new employment agreement with
him. The new agreement eliminates the performance based option arrangement and
allows for a one- time grant of stock options to acquire 1,357,000 shares of
Common Stock at an exercise price of $3.31 per share. The new agreement also
forgives the interest on the existing note, provides for a salary increase to
$300,000 and decreases the annual bonus to a sliding scale of pre-tax income,
beginning with the fiscal year ending March 31, 2000. This new agreement has a
rolling five-year term. Mr. Angelo Morini has drawn $130,835 in advances which
will be charged against future bonuses under the new employment agreement.
Angelo S. Morini's brother, Christopher Morini, works for the Company as Vice
President of Marketing. Angelo S. Morini's wife, Julie Morini, is employed by
the Company in the marketing and public relations departments. Mr. Morini's
brother-in-law, Robert Peterson, is employed by the Company as a sales
representative.
During each of the fiscal years ended March 31, 2000 and 1999, Joseph Juliano,
a director of the Company, was paid $36,000 in return for developing and
maintaining business relationships with prospective and existing customers and
suppliers on behalf of the Company. Commencing April 1, 2000, Mr. Juliano will
receive $5,000 per month for the above-described services.
In February 2000, Keith A. Ewing was appointed Chief Financial Officer of the
Company. Mr. Ewing's employment agreement provides for $125,000 base salary.
The agreement also provides for an automobile lease with insurance, which
together shall not
10
<PAGE> 13
exceed $800 per month. In addition, the Company provides a club membership at a
cost not to exceed $200 per month. Mr. Ewing will also be entitled to a bonus
that shall not exceed 60% of his base salary based upon the satisfaction of
certain performance criteria. The agreement grants Mr. Ewing stock options to
acquire 25,000 shares of Common Stock at an exercise price of $3.75. One third
of such options were immediately vested and exercisable upon grant, one third
of such options shall vest on the first anniversary of the date of grant, and
the final one third of such options shall vest on the second anniversary of the
date of grant, subject to Mr. Ewing's continued employment with the Company
through the vesting period. The options shall vest immediately in the event the
Company is sold. The agreement provides for a severance payment of three-months
salary whether termination is with or without cause.
Angelo S. Morini's brother, Christopher Morini, works for the Company as Vice
President of Marketing. In February of 1983, Christopher Morini was appointed
as Vice President of Marketing. Mr. Morini's employment agreement provides for
$126,250 base salary. The agreement also provides for an automobile lease with
insurance, which together shall not exceed $1100 per month. Mr. Morini will
also be entitled to a bonus that shall not exceed 40% of his base salary based
on certain personal and Company goals as established by the Company's Chief
Executive Officer.
In August of 1993, John Jackson was appointed as Vice President of Sales. Mr.
Jackson's employment agreement provides for $113,750 base salary. The agreement
also provides for an automobile lease with insurance, which together shall not
exceed $850 per month. Mr. Jackson will also be entitled to a bonus that shall
not exceed 40% of his base salary based on certain personal and Company goals
as established by the Company's Chief Executive Officer.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon the Company's review of Forms 4 which were not filed on a
timely basis, but furnished to the Company by Angelo Morini, Christopher
Morini, and John Jackson each an executive officer of the Company, with respect
to the fiscal year ended March 31, 2000, each of such individuals failed to
file reports on a timely basis. Angelo Morini's delinquent report related to
two transactions in which he acquired 10,400 shares of Common Stock. The
delinquent report of Christopher Morini related to a single transaction in
which he acquired 1,900 shares of Common Stock and the delinquent report of
John Jackson related to three transactions in which he acquired a total of
5,400 shares of common stock. Based solely upon the Company's review of a Form
3 which was not filed on a timely basis, but furnished to the Company by Keith
Ewing, an executive officer of the Company, with respect to the fiscal year
ended March 31, 2000, Mr. Ewing did not file a Form 3 to report an initial
grant of 25,000 options to acquire Common Stock and two transactions in which
he acquired a total of 1,200 shares of Common Stock.
11
<PAGE> 14
LEGAL PROCEEDINGS
To the knowledge of the Company, no executive officer or director of the
Company is a party adverse to the Company or has material interest adverse to
the Company in any legal proceeding.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met four times during the fiscal year ended March 31,
2000 and none of the directors attended fewer than 75% of the total number of
meetings of the Board of Directors and committees of which they were members.
The Board of Directors has established an Audit Committee. The Audit Committee
has adopted a written charter of the Audit Committee which is attached hereto
as Exhibit B. The Audit Committee currently consists of Messrs. Walsh, Luther
and Juliano and is responsible for recommending the appointment of independent
accountants and for reviewing the reports and expenses of the audits conducted
by the Company's independent accountants. The Audit Committee was established
at a meeting of the Board of Directors after the fiscal year ending March 31,
2000.
The Board of Directors does not currently have a standing compensation or
nominating committee or any other committees, other than the Audit Committee.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of the Company's Chief
Executive Officer for the fiscal years ended March 31, 2000, 1999 and 1998, and
{the} [OF TWO] Vice Presidents of the Company for the fiscal year ended March
31, 2000 (no other executive officer of the Company was compensated in an
amount in excess of $100,000 for any such other fiscal years):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------- ------------------------ ----------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Annual Restricted Under- All Other
Name and Compen- Stock lying LTIP Compen-
Principal Fiscal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs (#) ($) ($)(13)
--------- ------ ------- ------- -------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
ANGELO S. MORINI 2000 300,000 125,000 20,526(2) -- 1,357,000 -- 2,700
Chairman of the 1999 250,000 -- 20,128(3) -- -- -- 2,700
Board of Directors, 1998 250,000 -- 19,132(4) -- 142,858 -- 2,700
President, and Chief
Executive Officer (1)
</TABLE>
12
<PAGE> 15
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CHRISTOPHER MORINI 2000 126,250 25,000 7,753(6) -- -- -- 2,700
Vice President of 1999 125,000 10,000 7,753(7) -- 14,286 -- 2,700
Marketing (5) 1998 95,000 10,000 7,753(8) -- -- -- 2,700
JOHN JACKSON 2000 113,750 45,838 10,117(10) -- -- -- --
Vice President of 1999 110,000 -- 10,117(11) -- 14,286 -- --
Sales (9) 1998 85,000 -- 10,117(12) -- -- -- --
</TABLE>
(1) On June 17, 1999, the Company's Board of Directors approved to rescind
the existing employment agreement with the Company's President and Chief
Executive Officer, Mr. Angelo S. Morini, and to enter into new employment
agreement with him. The new agreement includes a one-time grant of stock
options to acquire 1,357,000 shares of Common Stock at an exercise price of
$3.31 per share. Under the new agreement, the Company forgave all outstanding
interest, approximately $3,000,000, on two promissory notes executed by Mr.
Morini in favor of the Company in connection with the exercise of certain
purchase rights and options previously granted by the Company to Mr. Morini.
The new agreement also provides for a salary increase to $300,000 and decreases
the annual bonus to a sliding scale of pre-tax income, beginning with the
fiscal year ending March 31, 2000, and has a rolling five-year term. In
conjunction with the entry into the new agreement, the Company agreed to a
consolidation of Mr. Morini's two existing promissory notes in favor of the
Company into a single note payable in the amount of $12,772,200, which is the
current outstanding balance of the obligation. This new note is non-interest
bearing, non-recourse to Mr. Morini, and is secured by 2,914,286 shares of the
Company's Common Stock beneficially owned by Mr. Morini.
(2) For the fiscal year ended March 31, 2000, the Company paid $11,860 in
lease payments for Mr. Morini's automobile and $8,666 in club dues for Mr.
Morini.
(3) For the fiscal year ended March 31, 1999, the Company paid $11,860 in
lease payments for Mr. Morini's automobile and $8,268 in club dues for Mr.
Morini.
(4) For the fiscal year ended March 31, 1998, the Company paid $11,500 in
lease payments for Mr. Morini's automobile and $7,632 in club dues for Mr.
Morini.
(5) Angelo S. Morini's brother, Christopher Morini, works for the Company as
Vice President of Marketing. In February of 1983, Christopher Morini was
appointed as Vice President of Marketing. Mr. Morini's employment agreement
provides for $126,250 base salary. The agreement also provides for an
automobile lease with insurance, which together shall not exceed $1100 per
month. Mr. Morini will also be entitled to a bonus that shall not exceed 40% of
his base salary based on certain personal and Company goals as established by
the Company's Chief Executive Officer.
(6) For the fiscal year ended March 31, 2000, the Company paid $6,553 in
lease payments for Mr. C. Morini's automobile, plus $100 per month for
automobile insurance.
(7) For the fiscal year ended March 31, 1999, the Company paid $6,553 in
lease payments for Mr. C. Morini's automobile, plus $100 per month for
automobile insurance.
13
<PAGE> 16
(8) For the fiscal year ended March 31, 1998, the Company paid $6,553 in
lease payments for Mr. C. Morini's automobile, plus $100 per month for
automobile insurance.
(9) In August of 1993, John Jackson was appointed as Vice President of Sales.
Mr. Jackson's employment agreement provides for $113,750 base salary. The
agreement also provides for an automobile lease with insurance, which together
shall not exceed $850 per month. Mr. Jackson will also be entitled to a bonus
that shall not exceed 40% of his base salary based on certain personal and
Company goals as established by the Company's Chief Executive Officer.
(10) For the fiscal year ended March 31, 2000, the Company paid $8,917 in lease
payments for Mr. Jackson's automobile, plus $100 per month for automobile
insurance.
(11) For the fiscal year ended March 31, 1990, the Company paid $8,917 in
lease payments for Mr. Jackson's automobile, plus $100 per month for automobile
insurance.
(12) For the fiscal year ended March 31, 1998, the Company paid $8,917 in
lease payments for Mr. Jackson's automobile, plus $100 per month for automobile
insurance.
(13) "All Other Compensation" represents the health insurance premiums paid on
behalf of the indicated employees by the Company.
OPTIONS/SAR GRANTS TABLE
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
-----------------------------------------------------------------------------------------------------------------------------------
Potential
Realized Value at
Assumed Annual Alternative
Rates of Stock Price to (f) & (g):
Appreciation Grant Date
Individual Grants for Option Term Value
------------------------------------------------------------------------------------- -------------------- -------------
(a) (b) (c) (d) (e) (f) (g) (f)
Number of % of
Securities Total
Under- Options/
lying SARS
Options/ Granted to Exercise Grant
SARs Employees or Base Date
Granted in Fiscal Price Expiration Present
Name (#) Year ($/Sh) Date 5%($) 10%($) Value $
---------------- ---------- ---------- -------- ---------- ----- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ANGELO S. MORINI 1,357,000 99.03% $ 3.31 06/15/09
KEITH EWING 8,333 0.61% $ 3.75 02/08/10
</TABLE>
14
<PAGE> 17
AGGREGATED OPTIONS/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End (#)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable (1)
---- --------------- ------------------ ------------- -----------------
<S> <C> <C> <C> <C>
ANGELO S. MORINI -- -- 1,520,072/0 519,500/0
CHRISTOPHER MORINI -- -- 22,857/0 11,985/0
JOHN JACKSON -- -- 21,429/0 11,715/0
</TABLE>
(1) The value of the unexercised shares as of March 31, 2000 is based on the
closing sales price of the Company's Common Stock of $3.69
COMPENSATION OF DIRECTORS
Each non-employee director who served on the Board of Directors during the last
fiscal year received a fee of $2,000 plus expenses for his services.
Additionally, each non-employee director of the Company is entitled to receive
on October 1 of each year, options to purchase a number of shares of Common
Stock equal to (i) 286 shares, if such director served for a full year prior to
the October 1 anniversary date, or (ii) a pro rated amount equal to 24 shares
for each full month served during the year prior to such anniversary date, if
such director did not serve for a full year prior to the anniversary date. Such
options are granted pursuant to the Company's 1991 Non-Employee Director Stock
Option Plan which was adopted by the Board of Directors on October 1, 1991, and
approved by the shareholders of the Company on January 31, 1992, as the same
was amended by that certain 1996 Amendment and Restatement of the 1991
Non-Employee Director Stock Option Plan (as amended, the "Director Plan").
EMPLOYMENT AGREEMENT OF CHIEF EXECUTIVE OFFICER
On June 17, 1999, the Company's Board of Directors approved to rescind the
existing employment agreement with the Company's President and Chief Executive
Officer, Mr. Angelo S. Morini, and to enter into a new employment agreement
with him. The new agreement includes a one-time grant of stock options to
acquire 1,357,000 shares of Common Stock at an exercise price of $3.31 per
share. Under the new agreement, the Company forgave all outstanding interest,
approximately $3,000,000, on two promissory notes executed by Mr. Morini in
favor of the Company in connection with the exercise of
15
<PAGE> 18
certain purchase rights and options previously granted by the Company to Mr.
Morini. The new agreement also provides for a salary increase to $300,000 and
decreases the annual bonus to a sliding scale of pre-tax income, beginning with
the fiscal year ending March 31, 2000, and has a rolling five-year term.
In conjunction with the entry into the new agreement, the Company agreed to a
consolidation of Mr. Morini's two existing promissory notes dated November 4,
1994 and October 11, 1995, in the respective principal amounts of $1,200,000
and $11,572,200 in favor of the Company (the "Prior Notes") into a single note
payable in the amount of $12,772,200, the aggregate principal amount
outstanding under the Prior Notes and the current outstanding balance of the
obligation. The Prior Notes were executed by Mr. Morini in favor of the Company
in connection with Mr. Morini's exercise of certain options and purchase rights
granted by the Company to acquire an aggregate of 2,914,286 shares of Common
Stock. The consolidated note is non-interest bearing, non-recourse to Mr.
Morini, and is secured by 2,914,286 shares of the Company's Common Stock
beneficially owned by Mr. Morini.
EMPLOYMENT AGREEMENT OF CHIEF FINANCIAL OFFICER
In February 2000, Keith A. Ewing was appointed Chief Financial Officer of the
Company. Mr. Ewing's employment agreement provides for $125,000 base salary.
The agreement also provides for an automobile lease with insurance, which
together shall not exceed $800 per month. In addition, the Company provides a
club membership at a cost not to exceed $200 per month. Mr. Ewing will also be
entitled to a bonus that shall not exceed 60% of his base salary based upon the
satisfaction of certain performance criteria. The agreement grants Mr. Ewing
stock options to acquire 25,000 shares of Common Stock at an exercise price of
$3.75. One third of such options were immediately vested and exercisable upon
grant, one third of such options shall vest on the first anniversary of the
date of grant, and the final one third of such options shall vest on the second
anniversary of the date of grant, subject to Mr. Ewing's continued employment
with the Company through the vesting period. The options shall vest immediately
in the event the Company is sold. The agreement provides for a severance
payment of three-months salary whether termination is with or without cause.
EMPLOYMENT AGREEMENTS OF THE VICE PRESIDENTS
Angelo S. Morini's brother, Christopher Morini, works for the Company as Vice
President of Marketing. In February of 1983, Christopher Morini was appointed
as Vice President of Marketing. Mr. Morini's employment agreement provides for
$126,250 base salary. The agreement also provides for an automobile lease with
insurance, which together shall not exceed $1100 per month. Mr. Morini will
also be entitled to a bonus that shall not exceed 40% of his base salary based
on certain personal and Company goals as established by the Company's Chief
Executive Officer.
16
<PAGE> 19
In August of 1993, John Jackson was appointed as Vice President of Sales. Mr.
Jackson's employment agreement provides for $113,750 base salary. The agreement
also provides for an automobile lease with insurance, which together shall not
exceed $850 per month. Mr. Jackson will also be entitled to a bonus that shall
not exceed 40% of his base salary based on certain personal and Company goals
as established by the Company's Chief Executive Officer.
ADDITIONAL INFORMATION WITH RESPECT TO INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
The Company did not have during the fiscal year ended March 31, 2000, and does
not currently have, a compensation committee or a committee of the Board of
Directors performing similar functions. Compensation for executive officers
other than Mr. Angelo Morini, the Company's Chief Executive Officer, is
determined independently by Mr. Morini. Joseph Juliano, Marshall K. Luther and
Douglas A. Walsh, each a member of the Board of Directors conducted discussions
and negotiations with Mr. Morini, and deliberations with respect to the
amendment of Mr. Morini's employment agreement and compensation which occurred
during the fiscal year ended March 31, 2000. Mr. Angelo Morini has drawn
$130,835 in advances which will be charged against future bonuses under the new
employment agreement.
During each of the fiscal years ended March 31, 2000 and 1999, Joseph Juliano,
a director of the Company, was paid $36,000 in return for developing and
maintaining business relationships with prospective and existing customers and
suppliers on behalf of the Company. Commencing April 1, 2000, Mr. Juliano will
receive $5,000 per month for the above-described services.
On June 17, 1999, the Company's Board of Directors approved to rescind the
existing employment agreement with the Company's President and Chief Executive
Officer, Mr. Angelo S. Morini, and to enter into new employment agreement with
him. The new agreement eliminates the performance based option arrangement and
allows for a one- time grant of stock options to acquire 1,357,000 shares of
Common Stock at an exercise price of $3.31 per share. The new agreement also
forgives the interest on the existing note, provides for a salary increase to
$300,000 and decreases the annual bonus to a sliding scale of pre-tax income,
beginning with the fiscal year ending March 31, 2000. This new agreement has a
rolling five-year term. Angelo S. Morini's brother, Christopher Morini, works
for the Company as Vice President of Marketing. Angelo S. Morini's wife, Julie
Morini, is employed by the Company in the marketing and public relations
departments. Mr. Morini's brother-in-law, Robert Peterson, is employed by the
Company as a sales representative.
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Company does not have a compensation policy
applicable to the Company's executive officers generally. Compensation for
executive officers
17
<PAGE> 20
other than Mr. Angelo Morini, the Company's Chief Executive Officer, is
determined independently by Mr. Morini.
The Company and Mr. Morini entered into an Amended and Restated Employment
Agreement effective June 15, 2000, which agreement was approved by the Board of
Directors. See "Chief Executive Officer's Employment Agreement" above for a
description of the terms of the agreement. The Board of Directors based its
approval of the agreement and the terms thereof on a number of factors
including Mr. Morini's significant contribution to the turnaround and
improvement of the Company's performance and position, Mr. Morini's level of
commitment and loyalty to the Company and his high degree of accepted risk on
behalf of the Company, and the improved performance and anticipation of
continuing improvements in performance, particularly in revenues and profit
margin, and the associated potential growth in shareholder value. In addition,
the Board of Directors determined that it was in the Company's best interest,
and the best interest of the shareholders, to modify certain terms and
conditions of Mr. Morini's prior employment agreement. These modifications
included, among other things, reducing the formula for the profit sharing
bonus, eliminating a right whereby Mr. Morini could require that the Company
repurchase certain of his common stock upon the occurrence of certain events,
and the elimination of mandatory performance stock options upon the Company's
achievement of specified "milestone" events.
Mr. Morini's compensation includes a profit sharing percentage incentive
component based upon the Company's achievement of certain levels of pre-tax net
income as determined by the Company's independent accounting firm.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graph set forth below provides comparisons of the yearly percentage change
in the cumulative total shareholder return on Galaxy Foods Company's Common
Stock with the cumulative total return of Standard & Poor's Smallcap Stock
Index and a Peer Group Index for the five fiscal years ended March 31, 2000.
COMPARATIVE TOTAL RETURNS
GALAXY FOODS, S&P SMALLCAP AND PEER GROUP
(PERFORMANCE RESULTS THROUGH 3/31/00)
1996 1997 1998 1999 2000
-------- -------- -------- -------- --------
GALAXY FOODS COMPANY $ 137.50 $ 54.19 $ 64.61 $ 36.90 $ 35.12
S&P SMALL CAP $ 108.75 $ 116.74 $ 171.03 $ 137.16 $ 177.94
PEER GROUP $ 103.35 $ 134.06 $ 143.73 $ 114.65 $ 102.57
18
<PAGE> 21
* Assumes $100 invested at the close of trading on the last day preceding the
first day of the fiscal year in Galaxy Foods Company, S&P Small Cap and the
Peer Group.
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the meeting other than stated above. If any other business
should come before the meeting, votes may be cast pursuant to proxies in
respect to any such business in the best judgment of the person or persons
acting under the proxies.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In addition
to soliciting shareholders by mail of by its regular employees, the Company may
request banks and brokers to solicit their customers who have stock of the
Company registered in the name of a nominee and, if so, will reimburse such
banks and brokers for their reasonable out-of-pocket costs. Solicitation by
officers and employees of the Company, none of whom will receive additional
compensation therefor, may also be made of some shareholders in person or by
mail, telephone or telegraph, following the original solicitation.
SHAREHOLDER PROPOSALS
It is anticipated that the Company's next annual meeting of shareholders will
be held in NOVEMBER 2001, and proposals of shareholders intended for inclusion
in the proxy statement will be furnished to all shareholders entitled to vote
at the next annual meeting of the Company, and must be received at the
Company's principal executive offices no later than July 15, 2001. It is
suggested that proponents submit their proposals by certified Mail-Return
Receipt Requested. Notice of shareholder proposals outside the processes of
Rule 14a-8 of the of the Securities Exchange Act of 1934, as amended, (for
proposals submitted for inclusion in proxy statement and form of proxy) for the
next annual meeting of shareholders must be received at the Company's principal
executive offices no later than September 20, 2001.
The Company will provide without charge to each person whose proxy is being
solicited hereby, upon the written request of such person, a copy of the
Company's annual report on Form 10-K, including the financial statements and
the financial statement schedules, filed with the Securities and Exchange
Commission for the Company's fiscal year ended March 31, 2000. All such
requests should be directed to Investor Relations, at 2901 Titan Row, Suite
136, Orlando, Florida 32809.
19
<PAGE> 22
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GALAXY FOODS COMPANY
Galaxy Foods Company, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation pursuant to a
unanimous written consent dated as of _____________, 2000, adopted the
following resolution:
RESOLVED, that the Board of Directors of this Corporation hereby
declares it advisable and in the best interest of the Corporation that
Article First of the Certificate of Incorporation be amended to read
as follows:
First: The name of the Corporation shall be "Galaxy
Nutritional Foods, Inc."
SECOND: That the said amendment has been consented to and authorized
by the holders of a majority of the issued and outstanding stock
entitled to vote in accordance with the provisions of Section 211 of
the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance
with Sections 211 and 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Angelo S. Morini, its President, and attested to by Cynthia L.
Hunter, its Secretary, this ___ day of ______________, 2000.
ATTEST: GALAXY FOODS COMPANY
By:
---------------------------------- ---------------------------------
Cynthia L. Hunter, Secretary Angelo S. Morini, President
<PAGE> 23
EXHIBIT B
AUDIT COMMITTEE CHARTER
GALAXY FOODS COMPANY
ORGANIZATION
There shall be a committee of the board of directors to be known as the audit
committee. This committee shall consist of at least three directors who are
independent of the management of the company (as defined by the listing
standards of the AMEX) and are free of any relationship that, in the opinion of
the board of directors, would interfere with their exercise of independent
judgment as a committee member. Each member of the committee shall be able to
read and understand financial statements or will become able to do so within a
reasonable time after his or her appointment to the committee, and at least one
committee member shall have had past employment experience in finance or
accounting, requisite professional certification in accounting or any other
comparable experience or background that results in the individual's financial
sophistication as determined in the board's judgment.
STATEMENT OF POLICY
The audit committee shall oversee and monitor management's and the independent
auditors' participation in and responsibility for the financial reporting
process of the company. In so doing, it is the responsibility of the audit
committee to maintain free and open means of communication among the directors,
the independent auditors and the senior and financial management of the company.
While the committee has the responsibilities and powers set forth in this
charter, it is not the duty of the committee to plan or conduct audits or to
determine that the company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of financial management and the independent auditors. Nor is it
the duty of the committee to conduct investigations, to resolve disagreements,
if any, between management and the independent auditors, or to assure compliance
with laws and regulations.
<PAGE> 24
RESPONSIBILITIES
A. Review of Documents and Reports
o Review and update the committee's charter at least annually.
o Review the financial statements contained in the annual report
to shareholders with management and the independent auditors
to determine that the independent auditors are satisfied with
the disclosure and content of the financial statements to be
presented to the shareholders. Any changes in accounting
principles should be reviewed. Significant findings,
difficulties encountered during the course of audit work and
any changes in the planned scope should also be reviewed with
the independent auditors.
B. Independent Auditors
o Review and recommend to the directors the independent auditors
to be selected to audit the financial statements of the
company, considering independence and effectiveness, and
approve the fees and other compensation to be paid to the
independent auditors. The independent auditors for the company
are ultimately accountable to the board and the committee, and
the board and committee have the ultimate authority and
responsibility to select, evaluate and, when appropriate,
replace the independent auditors.
o Ensure that the independent auditors submit on a periodic
basis to the committee a formal written statement delineating
all relationships between the auditors and the company,
actively engage in a dialogue with the independent auditors
with respect to any disclosed relationship or service that may
impact the objectivity and independence of the independent
auditors, and recommend that the board take appropriate action
in response to the independent auditors' report to satisfy the
committee of the independent auditors' independence.
<PAGE> 25
C. Financial Reporting Process
o Provide an open avenue of communication among the independent
auditors, senior and financial management and the board of
directors.
o Meet with the independent auditors and financial management of
the company to review the scope of the proposed audit for the
current year and the audit procedures to be used and, at the
conclusion thereof, review such audit, including any comments
or recommendations of the independent auditors.
o Review with the independent auditors, the internal audit
department, and the financial and accounting personnel, the
adequacy and effectiveness of the accounting and financial
controls of the company, including computerized information
system controls and security. Elicit any recommendations for
the improvement of such internal control procedures or
particular areas where new or more detailed controls or
procedures are desirable.
D. Ethical and Legal Compliance
o Submit the minutes of all meetings of the audit committee to
or discuss the matters discussed at each committee meeting
with the board of directors.
o Investigate any matter brought to its attention within the
scope of its duties with the power to retain outside counsel,
accountants or others, for this purpose, if, in its judgment,
it is deemed appropriate.
<PAGE> 26
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<PAGE> 27
GALAXY FOODS COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - NOVEMBER 16, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Angelo S. Morini with full power of
substitution, the proxies of the undersigned to vote all shares of Common Stock
of Galaxy Foods Company (the "Company") which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of the Company to be held on
Thursday, November 16, 2000, at 10:00 a.m., local time, at the Wyndham Hotel,
located at 8001 International Drive, Orlando, Florida, and at any adjournments
or postponements thereof, with the same force and effect as the undersigned
might or could do if personally present thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY to vote for all
nominees listed below.
(Instruction: To withhold authority to vote for any nominee, draw a line
through such nominee's name.)
Marshall K. Luther, Angelo S. Morini, Douglas A. Walsh, M.D., Joseph Juliano
2. TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED, TO CHANGE
THE NAME OF THE COMPANY TO "GALAXY NUTRITIONAL FOODS, INC." (The Board of
Directors recommends a vote FOR)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO RATIFY THE RETENTION OF BDO SEIDMAN, L.L.P. AS THE COMPANY'S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS (The Board of Directors recommends a vote FOR)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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4. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENT THEREOF. The Board of Directors knows of no business which
will be presented for consideration at the meeting other than stated above.
If any other business should come before the meeting, votes may be cast
pursuant to proxies in respect to any such business in the best judgment of
the person or persons acting under the proxies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Signature:
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Signature:
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Date:
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This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR proposal 1, FOR proposal 2, FOR proposal 3 and FOR proposal 4. If
signing as an attorney, executor, trustee or guardian, please give your full
title as such. If stock is held jointly, each owner should sign.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
